This is a quick note on where the paragraph 6 negotiations seem to have
broken down. There was a period after Doha, where the USTR and DG-Trade
genuinely appeared to be making an effort to control their own export
industries, and reach a feasible compromise. There were significant
differences between positions advocated by the USTR, DG-Trade and developing
countries, and public health groups were quite critical of the many of the
early proposals, but a deal seemed to be possible.

DG-Trade seemed intent on limiting the "solution" to cases where its various
(let DG-Trade regulate prices in developing countries) tiered pricing
systems broke down, and DG-Trade always wanted a set of special controls
(safeguards) on developing countries (things they asked for but did not get
in the Canada Article 30 bolar case). DG-Trade also made an early decision
to exclude OECD countries from the solution, both as importers and
exporters, believing it would eventually adopt a community patent, allowing
it to "solve" the 31.f problem within Europe itself. DG-Trade refused to
engage its own consumer interests in negotiations, framing everything as a
development issue, but it was mostly protecting what it perceived as its
core protectionist interest of its export pharma industry, while moving
ahead on paragraph 6.

The USTR was less interested in the various TRIPS plus "safeguards" the
DG-Trade was pushing, and mostly wanted to limit the "solution" to as few a
countries and as few diseases as possible, but on the issue of the diseases,
the US seemed to have some flexibility, having a very difficult time
explaining to anyone why cancer, asthma and some devices would be excluded.
The US also showed some early flexibility on reframing the issue in terms
of economies of scale, something DG-Trade refused to do. The US strategy in
negotiations was early on to split the Africa group from the Latin and Asian
delegates, and to focus on the capitals, where trade ministers were less
informed and easier to pressure, and where the US could link a narrow
paragraph 6 solution to textiles, agriculture and other issues.

Right after Doha, the US government created an interagency task force to
deal with paragraph 6, with DHHS, State, Department of Commerce, USPTO, USTR
and others. State send a major cable out to African embassies in March (we
believe). The US government negotiators and pharma held regular meetings.

By the summer, big pharma began to exercise far more power in the US and EC
decision making, and DG-Trade and USTR positions began to harden on a number
of issues.

DG-Trade began to push for a role for the WTO in supervising individual
licenses that was quite extraordinary, and they decided the would try to
block an Article 30 approach, in favor of mechanisms that were as
complicated and burdensome as possible, giving the industry a set of
inventory and marketing surveillance tools that it would use to undermine
the generic industry. DG-Trade as also maddenly legalistic on a number of
stupid issues, such as the need to limit the solution to only the precise
issues raised in the decidedly poorly written Paragraph 6 of the Doha
Declaration, for example focusing endlessly on the issue of how to measure
manufacturing capacity, as if this was the main public health problem
presented by 31.f, and as if DG-Trade never read the Canadian/EC bolar
dispute where economies of scale and exports were a major issue (and
DG-Trade lost) . The DG-Trade position was complicated by significant
dissent (pro-public health positions) in several European countries
(Netherlands, Belgium, France) and the European Parliament (Amendment 196).

The USTR by the summer had lost control over policy making to the White
House, and Zoellick pushed the USTR to harder and harder lines on a variety
of issues, but particularly on the scope of diseases. In the US election,
big pharma poured in millions, and was decisive in holding the House and
shifting the Senate to the republicans. Right before the election,
President Bush was forced to hurt big pharma on US Hatch/Waxman issues to
get votes. After the election, big pharma demanded ever greater control
over the paragraph 6 negotiations. CEOs of companies were making regular
calls, and PhRMA demanded the USTR deliver on the scope of diseases issues.

In Sydney, Zoellick told the Africa group that the USA opposed allowing
asthma, cancer and other diseases in the "solution" and the USTR told the US
press it didn't want X-Ray machines included. Rosa Whitaker sent her famous
"three diseases" letter to Africa governments, PhRMA circulated a "three
disease" letter in the US Congress, PhRMA planted a long editorial in the
WSJ on "three disease" theory of what the Doha Declaration was about.

As the TRIPS Council meeting began this week, there was a big pharma meeting
in the White House on Monday, and PhRMA's Shanon Herzfeld was checked into
the Hotel President Wilson with the US delegates to crack the whip. Japan
kicked off the disease debate by insisting the vaccines be removed from the
solution, on the grounds that vaccines were technically not pharmaceuticals,
another legalistic reading of paragraph 6 that was completely at odds with
everything public health workers would recommend, and presenting the African
group with a "solution" that didn't even include the technologies that might
make ARV's unnecessary. Meanwhile the US press was hailing vaccines that
appeared to be promising for breast, cervical and other cancers, which were
clearly excluded on two grounds, they are for cancer, and are vaccines.
Then the US proposed its famous traveling disease criteria, to limit the
solution to only infectious epidemics, as if the US would only tolerate
public health measures that might have a consequence on the US.

This week US missions in Africa, Asian and Latin American capitals stepped
up their pressure to close the deal, one African delegate reporting having
had a 30 minute call yesterday from his Trade Minister, demanding his Geneva
negotiator to just give the American's what they wanted. But Pharma over
played its hand. If there was a moment, it was when it was reported that
Japan wanted vaccines out. After that, there was a sense that things were
completely out of hand, and the US, DG-Trade, Canada, and Switzerland
appeared to be getting nowhere to closing out the deal.

There was open criticism of the way that Edouardo Perez Motta from Mexico
was managing the negotiations, including language in drafts of text that
were in some cases verbatim from the pharma/Congress letter, and were highly
responsive to US/Japan suggestions on scope of diseases, and often not
responsive to delegations that were asking for more attention to Article 30
style approaches in terms of legal mechanisms.

Now the USTR is stuck spending Thanksgiving explaining to Shanon Herzfeld of
PhRMA how threats of nuclear attacks may be necessary to move the Africa
group to cut a deal by Friday at 2 pm, when the TRIPS council has a special
unscheduled meeting for one more attempt to end this negotiation.